1927-1933 Chart of Pompous Prognosticators

1927-1933 Chart of Pompous Prognosticators
pomp prog
Chart locations are an approximate indication only

1. “We will not have any more crashes in our time.”
– John Maynard Keynes in 1927 [NB: The authenticity of this one is a little suspect]

2. “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
– E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

“There will be no interruption of our permanent prosperity.”
– Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

3. “No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”
– Calvin Coolidge December 4, 1928

“When the financial and business history of 1929 is finally written, developments of the past fortnight will occupy a prominent place in what will doubtless be the chronicle of an exceptionally brilliant twelve month period.”
– The New York Times, July 1929

“It becomes increasingly evident that, in many respects, 1929 will be written into the commercial history of the country as the most remarkable year since the World War in point of sustained demand for goods and services.”
– The New York Times, August 1929:

4. “There may be a recession in stock prices, but not anything in the nature of a crash.”
– Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

“Stock prices will stay at high levels for years to come, says Ohio economist”
– The New York Times, II, Page 7, Col. 2, Oct 13, 1929

5. “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher than it is today within a few months.”
– Irving Fisher, Ph.D. in economics, Oct. 17, 1929

The market went into decline until Monday, October 21st, 1929

“He dismissed yesterday’s break in the market as a ‘shaking out of the lunatic fringe that attempts to speculate on margin.'”
– Irving Fisher, The New York Times, Oct. 22, 1929

“security values in most instances were not inflated”
“The nation is marching along a permanently high plateau of prosperity”
“any fears that the price level of stocks might go down to where it was in 1923 or earlier are not justified by present economic conditions”
– Irving Fisher, speech to a banking group, Oct. 23, 1929

“This crash is not going to have much effect on business.”
– Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

Flashback to “Black Thursday,” Oct. 24, 1929:

Stocks opened moderately steady in price, but traders whose margins were exhausted began selling heavily… at one o’clock the stock ticker was recording prices from half past eleven… stocks dropped 11% intra-day… After a bankers’ consortium sent NYSE Vice President Richard Whitney to the stock exchange floor to offer to purchase in the neighborhood of twenty or thirty million dollars’ worth of stock at the previous selling price [most likely above their quotations], the market eventually closed with only a 2% loss.
Ref: Only Yesterday: An Informal History of the 1920’s, Frederick Lewis Allen, Chap. XIII.

Not long after, the stock market plummeted in two days of panic: October 28 became known as “Black Monday” (13.47% decline in the Dow), and October 29 as “Black Tuesday” (11.73% decline in the Dow). Between October 23rd and November 13th, 1929, the Dow fell by 39%.

“There will be no repetition of the break of yesterday… I have no fear of another comparable decline.”
– Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
– Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

“The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.”
– President Herbert Hoover, October 25th, 1929

“They have lost a few tail feathers but in time they will grow again, longer and more luxurious than the old ones.” – The Wall Street Journal, between Oct 24 and Oct 29, 1929

“The investor who purchases securities at this time with the discrimination that as always is a condition of prudent investing may do so with confidence.”
– New York Times, October 28, 1929

6. “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
– R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

“Buying of sound, seasoned issues now will not be regretted”
– E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.”
– R. W. McNeal, financial analyst in October 1929

7. “The decline is in paper values, not in tangible goods and services…America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.”
– Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

“Hysteria has now disappeared from Wall Street.”
– The Times of London, November 2, 1929

“The Wall Street crash doesn’t mean that there will be any general or serious business depression… For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.”
– Business Week, November 2, 1929

“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…”
– Harvard Economic Society (HES), November 2, 1929

8. “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”
– HES, November 10, 1929

“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”
– Irving Fisher, Professor of Economics at Yale University, November 14, 1929

“In most of the cities and towns of this country, this Wall Street panic will have no effect.”
– Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

“Financial storm definitely passed.”
– Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

9. “I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
– Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“I am convinced that through these measures we have reestablished confidence.”
– Herbert Hoover, December 1929

“[1930 will be] a splendid employment year.”
– U.S. Dept. of Labor, New Year’s Forecast, December 1929

10. “For the immediate future, at least, the outlook (stocks) is bright.”
– Irving Fisher, Ph.D. in Economics, in early 1930

11. “…there are indications that the severest phase of the recession is over…”
– Harvard Economic Society (HES) Jan 18, 1930

12. “There is nothing in the situation to be disturbed about.”
– Secretary of the Treasury Andrew Mellon, Feb 1930

13. “The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
– Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930

“… the outlook continues favorable…”
– HES Mar 29, 1930

14. “… the outlook is favorable…”
– HES Apr 19, 1930

15. “While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
– Herbert Hoover, President of the United States, May 1, 1930

“…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…”
– HES May 17, 1930

“Gentleman, you have come sixty days too late. The depression is over.”
– Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

16. “… irregular and conflicting movements of business should soon give way to a sustained recovery…”
– HES June 28, 1930

17. “… the present depression has about spent its force…”
– HES, Aug 30, 1930

18. “We are now near the end of the declining phase of the depression.”
– HES Nov 15, 1930

19. “Stabilization at [present] levels is clearly possible.”
– HES Oct 31, 1931

20. “Executive Order 6102 Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates

By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled “An Act to provide relief in the existing national emergency in banking, and for other purposes”, in which amendatory Act Congress declared that a serious emergency exists, I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order…

All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following:

1. Such amount of gold as may be required for legitimate and customary use in industry, profession or art within a reasonable time, including gold prior to refining and stocks of gold in reasonable amounts for the usual trade requirements of owners mining and refining such gold.
2. Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00 belonging to any one person; and gold coins having recognized special value to collectors of rare and unusual coins.
3. Gold coin and bullion earmarked or held in trust for a recognized foreign government or foreign central bank or the Bank for International Settlements.
4. Gold coin and bullion licensed for the other proper transactions (not involving hoarding) including gold coin and gold bullion imported for the reexport or held pending action on applications for export license…”
Franklin D. Roosevelt

The Whitehouse
April 5, 1933

via Colin J. Seymour, June 2001
20 June 2001

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What's been said:

Discussions found on the web:
  1. Alan Greenspend commented on Nov 8

    Wonderful Bull quotes, here’s a comment from a Bear, a little further back in time…

    “The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn’t want to go bankrupt.”

    Cicero (106 BC – 43 BC), 55 BC

  2. lurker commented on Nov 8

    BC must mean Before Corruption.
    Thanks Al and Cicero.

  3. scorpio commented on Nov 8

    barry: what’s your point?

  4. Eddie commented on Nov 8

    Anyone know what the PE ratio of the markets were back then?

  5. vhehn commented on Nov 8

    Its interesting how when we are wrong about the market we all search around for data to bolster our case. For the record i am hoping for a selloff too so i can rebuy but the market does not care what we think or want.

  6. Monica Gagnier commented on Nov 8

    Hey, let’s give Irving Fisher a break. He may have been wrong about the market but he was on the verge of formulating his valuable debt-deflation theory (1933). Unlike some of the guys quoted above, he learned from his mistakes.

  7. Michael C. commented on Nov 8

    So the Democrats are gonna take the Senate, and MS Vista is shipping as scheduled.

    What’s next for a reason to keep buying and buying and…

  8. jab commented on Nov 8

    Democrats took the Senate
    MS Vista is shipping
    …… Is Hell freezing over and are Pigs flying???

  9. Ollie commented on Nov 8

    Barry, was this entry intentionally self-deprecating? Or has someone hijacked your blog?

  10. vhehn commented on Nov 8

    “What’s next for a reason to keep buying and buying and…”
    We dont know yet. You can never always know the motivation of the buyer or seller. That is why fundamental analysis does not work well.

  11. fred hooper commented on Nov 8

    “All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.”
    – President F.D. Roosevelt, 1933

    Ominous. I was going to wait until the first of the year to cash out my IRA’s, pay taxes and penalties, and go hide in my bunker. Maybe I should bite the bullet and do it now?

  12. jab commented on Nov 8

    Don’t keep your gold in safety deposit boxes! Nobody thought it would happen the first time.

  13. Josh commented on Nov 8

    I love the fact that so many people can think for themselves.

  14. charts commented on Nov 8

    barry, are you putting your dow closes at 7200 in 2006 call on this year’s edition of pompous prognosticators?

  15. S commented on Nov 8

    “Markets are never wrong. Opinions are.” — Jesse Livermore

  16. Andrew commented on Nov 8

    Lots of you, seem to be in a critical mood today. Hedgies and fund managers are refusing to give up there gains…. probably since they were the ones buying in July.

    THis market is badly extended, I can’t join the bulls here… it is getting dangerous. Are we really at the start of a new bull phase? No…. we are not. The yield curve is still inverted, and the economy is still slowing etc…. so in relative terms we are expected to buy stocks after 3 up days of about 23 points on the S&P hahaha.

    This is funny.

  17. Barry Ritholtz commented on Nov 8

    Actually, markets are occasionally wrong —

    In March 2000, Markets said that the Nasdaq at 5100 was fine, stocks with little revenues and no profits all good —

    In October 2002, the market said profitable, debt-free tech and telecom stocks were worth less than their cash on hand.

    Both times, the markets were wrong.

    Of course, opinions are wrong even more often . . . but lets not pretend markets are flawless

  18. clunk commented on Nov 8

    If the market is a long term weighing machine, then it must weigh the possibility of such a creature as Hillary in the White House, with support from both houses of Congress. When these scales balance, Mr Market may not wear such a happy face.

  19. James Bednar commented on Nov 8

    “There may be a recession in stock prices, but not anything in the nature of a crash.”
    – Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

    Always a favorite!

    -New Jersey Real Estate Report

  20. Anonymous commented on Nov 8

    Any famous examples of those who timed the ’29 market correctly?

  21. HARM commented on Nov 8

    Any famous examples of those who timed the ’29 market correctly?

    “When the shoe-shine guy gives you stock tips, it’s time to get out.”
    –Joseph Kennedy (just prior to 1929 stock market crash)

  22. BKE commented on Nov 8

    I think I’ll go check out some jewelry stores to see how big a rock I can find for my wife’s umpteenth diamond ring.

    Wait, maybe I’ll just rob the joint instead.

  23. jjr commented on Nov 8

    Jesse Livermore perhaps most famously timed the 1929 market correctly, after having done so with the 1907 bear market and subsequently going bankrupt. I dug out a copy of _Reminiscences of a Stock Operator_ just last night to seek wisdom to hold onto my short positions in the face of an obviously insane market. I try to reread this book yearly.

  24. Michael C. commented on Nov 8

    >>>Actually, markets are occasionally wrong —

    In March 2000, Markets said that the Nasdaq at 5100 was fine, stocks with little revenues and no profits all good —

    In October 2002, the market said profitable, debt-free tech and telecom stocks were worth less than their cash on hand.

    Both times, the markets were wrong.<<< Barry, I'm not sure what you mean by wrong. I don't want to argue semantics but what exactly is "wrong?" Is it just a matter of timing? They were right at the time. Wrong a year later in hindsight?

  25. Kris Tuttle commented on Nov 9

    This post reminds me of an excellent read about the Crash by Galbraith. It’s very well written and you can appreciate the similar levels of experts putting forth conclusions without any knowledge.

    No matter which side of the arguments about the market you are on the one clear thing that emerges is the need for risk management to deal with uncertainty and the prospect of fluctuating liquidity.

  26. alex commented on Nov 15

    I believe Charles Merrill Called the top too, or he put out some letter to his clients that they should be cautious. Smart money got out in 29 like it did in 2000.

    And the money that didnt get out in 29 got out when they stabalized the market so they could get out.

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